Companies' Perspectives of The New Zealand Emissions Trading Scheme

Abstract

This study explores, through semi-structured interviews, companies' perspectives from the mining, electricity and forestry industry on the key design elements of the New Zealand Emissions Trading Scheme (NZ ETS), which are linking, pricing, liquidity, enforcement and allocation of credits. The results are as such. Regarding linkage, participants wish to link the NZ ETS with other schemes as climate change is a global issue in addition to providing lower abatement costs. There are two main arguments on the pricing of New Zealand emissions units (NZUs): floating and fixed price. Greater information disclosure and regulatory certainty will increase liquidity. There needs to be an independent regulator to ensure no political interference. The allocation of credits is a contentious issue with an almost unanimous agreement that an intensity-based regime is fairer. The linking of the NZ ETS enables a global concerted effort to reduce climate change. A two-staged pricing mechanism will protect the economy from international emission price volatility. In addition, a two-staged allocation regime from intensity to absolute obligation will provide an equitable base.